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Key steps to buying your first home

Key steps to buying your first home

Category: Mortgages

Updated: 19/06/2017
First Published: 19/06/2017

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

As newly released figures show the first June drop in the price of properties coming onto the market since 2009, combined with our own data showing mortgage rates continue to fall – at least for now – it's a good time for any would-be buyer to consider jumping onto the property ladder. But how exactly do you go about that? Well, we're here to help.

Fall in property price

Rightmove's monthly House Price Index, released today, reveals a 0.4% monthly fall in the price of property coming to the market (meaning a drop of £1,172 on average). This is the first time such a fall has been recorded in the month of June since 2009, with spring usually a prime time for putting a house up for sale.

Miles Shipside, Rightmove director and housing market analyst, explained: "The price of property coming to the market had increased in June in every year since 2009, so buyer confidence has clearly been affected by inflation outstripping their pay packets and current political events."

Additional figures show that the first-time buyer sector (consisting of properties with two bedrooms or fewer) is now the fastest growing sector of the market, with newly-listed prices surging by 3.5% month-on-month and 5.5% on a yearly basis as "those at the traditional starter level are brushing aside uncertainty". With such intense competition, it's important to know how to make yourself stand out from the crowd and look more attractive to both sellers and mortgage providers.

How to join in

If you're ready to jump in and want to make sure you're fully prepared so you can make a good impression, we've outlined key steps to help you to reach that first step on the ladder:

  • Find out how much you'll need to save up. Look at house prices in the area that you want to live in, and determine how much of a deposit you'll need (5% of the value for a first-time buyer mortgage, or at least 10% if you want to benefit from low fixed mortgage rates in the wider market). Then look at how much you'll need to separately save up in additional mortgage fees such as valuation and arrangement fees, moving costs, and stamp duty, if applicable.

  • Save up the required amount, and maybe a bit extra. Use long-term bonds or ISAs to maximise the returns on your savings, and consider taking advantage of the 25% Government bonus offered through a Help to Buy ISA or Lifetime ISA.

  • Check your credit. Before you start talking to mortgage providers, check what your credit score is, and that of your partner if you'll be applying together, to make sure it's up to scratch. If it's not, be sure to improve itbefore you start applying, or you'll risk getting rejected and making your credit even worse.

  • Find a mortgage provider. While it may seem weird to apply for a mortgage before you've found the house you want, it could be the thing that differentiates you from other buyers, as you'll be able to move much faster than them. Look through the mortgage Best Buys, contact the provider that sounds best to you, and try to agree a mortgage in principle. This will have the additional benefit of showing you how much you'll be able to borrow, and at what rate, which will give you a better idea of what to look for in the next step.

  • Find the property you want. There are many ways to go about this, depending on your requirements and circumstances. You'll know from the previous step what house price you can afford, but always check the affordability again once you've found the house you want, in case there are unforeseen costs or other hurdles to overcome.

  • Once you've found the house for you, make an offer. You might want to run this by your mortgage provider or realtor, to make sure you're not overpaying while at the same time maximising your chances of being accepted. You may need to put up a small holding deposit for this.

  • If your offer gets accepted, it's time for a small celebration. You should already have a mortgage in place, so it'll be an easy matter of completing the mortgage process, and then hiring a solicitor to handle the paperwork. Your mortgage provider or real estate agent might be able to help with this, but you might want to find your own independent legal assistance, by asking friends and family who they've used for instance.

  • Get a survey done. While your mortgage lender will require a valuation, this will not be able to uncover any less obvious flaws with the building you are about to spend a lot of money on. It's therefore always safer to get a survey done, especially if you're buying an older or unusual property, as you wouldn't want to find yourself unexpectedly having to spend a lot of money fixing things.

  • Exchange contracts. You're nearly there! Once you and the seller exchange and sign contracts, there's no going back. Say goodbye to your deposit, don't forget to buy some home insurance, and start planning the big move!

If this all still sounds like a lot of complicated work, don't worry, there's lots of experts who'll be able to advise you along the way. Buying a home is a big decision, involving substantial funds, so it makes sense that it requires careful planning and effort. Hopefully, if you go about it the right way and find the right place, it'll all be worth it in the end.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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